Baring's stake sale delay MphasiS may see higher attrition

THE delay in Barings' stake sale in MphasiS BFL Ltd over valuation issues appears to have impacted the company's people resource pool.

Barings India Investment Ltd had put its 35.5 per cent stake in MphasiS on the block in early May this year.

A section of head-hunters in Bangalore, whom Business Line spoke to said, of late, resumes of MphasiS employees have started making rounds in large numbers. Sources said the entire HR division among other divisions at MphasiS is experiencing a shakeout.

"The delay in finalising the stake sale has created a sense of uncertainty among employees, especially a section of the top management and the mid-management," sources said adding that a couple of mid-management executives have put in their papers. However, highly placed sources at MphasiS dismissed the reports as speculative and declined to comment. MphasiS currently has some 9,000 employees including its BPO staff.

When Barings announced its plans to exit MphasiS over three months ago, it evoked a lot of interest among private equity funds, but very few seemed to have made it to the last lap. Till early last week, the market speculation was that Singapore government fund Temasek and Hinduja TMT were the front-runners for Barings' stake. However, unconfirmed reports over the week-end suggested that Tata Consultancy Services (TCS) and CapGemini have re-entered the race.

The process of Barings' stake sale is getting dragged over the valuation issues. Barings is said to be seeking a premium on the current market price for its stake. MphasiS closed at Rs 263.85 on the Bombay Stock Exchange on Friday.

While it is believed that Temasek has offered not more than Rs 230-250 per share, HTMT is said to have offered a higher price. However, sources said the MphasiS top management is strongly opposed to a sale to the Hinduja Group.

Last week, the company had said its CFO, Mr Ravi Ramu, was leaving the company, but would continue till the deal was settled.

An MphasiS employee said that there was a lot of uncertainty and people are on the lookout for jobs and that there are resumes floating around with several placement consultants.

"But the re-entry of CapGemini into the fray is good news for employees and if that happens, many employees will reconsider their decision to quit," the employee said.

(This article was published in the Business Line print edition dated August 22, 2005)

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